The House and the Senate have now passed versions of the “Tax Cuts and Jobs Act,” and they are beginning to resolve the differences between the two bills in the conference process. According to Congress’ own nonpartisan analysis, the bills raise taxes on the poor and cut taxes on the rich, violating basic principles of justice. In addition, Congress has proposed a web of wide-ranging and complex changes to the tax code, yet is approaching the process at a pace that makes it difficult even for experts in the impacted areas to analyze effects. Several key changes must be made because the bills in their current form are morally unacceptable, including:
- The nonpartisan Joint Committee on Taxation indicates that both the Senate and House bill will eventually raise taxes on the poor while simultaneously cutting taxes for the wealthy. The final proposal must be amended to avoid this outcome.
- The repeal of the personal exemption will cause larger families with more than three children to be financially worse off. The exemption should be restored, or the final bill should be amended to address this problem.
- The child tax credit’s refundability portion is either not increased (House) or very modestly increased (Senate), and should be expanded. The final bill should also strip out changes that will harm immigrant taxpayers.
- The deduction for medical expenses should be retained and expanded. It is eliminated in House, but retained and modestly expanded in the Senate.
- The exclusion for employer adoption assistance should be retained.
- The final bill should include and expand on the Senate’s paid family leave and medical leave incentives, but without a sunset.
- The final bill should incorporate the positive expansion of the deduction for educator expenses; as wells as the change to 529 plans to allows them to be applied to K-12 education, recognizes the child in utero, and allows an additional $10,000 to be set aside for school expenses. The final bill should not eliminate the Section 127 exclusion for education assistance or the Section 117 qualified tuition reduction.
- The Senate language eliminating the ACA Individual Insurance Mandate should not be adopted.
- Congress should adopt an “above-the-line” charitable deduction that would incentivize and assist charitable giving at all income levels, and increase amounts people can give.
- The House repeal of mortgage credit certificates should not be adopted.
- The final bill should not eliminate deductions that help struggling families, such as the Work Opportunity Tax Credit, the credit for those who retire on disability, deductions for tuition and student loans, state and local income tax, union dues and expenses, clothing and uniforms, and worker-related education.
- The final bill should retain the Housing Credit and Housing Bonds that go towards the development of low-income housing, and build in additional measures so that the credits are not devalued by the lower corporate tax rate. Further, the creation of “Opportunity Zones” for community development should be included and expanded.
- The final bill should leave in place the current Alternative Minimum Tax and estate tax in order to ensure that the risks taken in tax reform fall on those who stand to benefit most, rathe than on those who struggle on the margins of society.
For a link to Bishop Frank J. Dewane’s December 6, 2017, letter analyzing both the Senate and House bills, click: http://www.usccb.org/issues-and-action/human-life-and-dignity/federal-budget/upload/Tax-Conference-Letter-Congress-2017-12-06.pdf